"The structure of a country’s tax code is an important determinant of its economic performance." This is the opening sentence of the International Tax Competitiveness Index (ITCI) for 2017 produced by the American Tax Foundation group, which looks at the tax systems of the countries that are members of the Organisation for Economic Cooperation and Development (OECD).
The report takes 40 variables into account. It uses these variables to compare the overall tax burden on businesses in each country, pronounce on the taxation of legal entities, and measure the level of taxes, analysing how these are structured. The index covers corporate tax, land tax, income tax, consumption taxes, and the rules applied to profits earned abroad.
The Grand Duchy moves up two places
The study shows that, for the fourth year running, Estonia has the most competitive tax system of all OECD countries, closely followed by New Zealand, with Switzerland in third place.
The Grand Duchy has moved two places up the list since last year, and now stands in 5th place, occupying 2nd place in the 'international tax rules' ranking. Consumption taxes are also very competitive: the Grand Duchy ranks 5th out of 35 in this category. However, the Grand Duchy does less well in terms of corporate tax, ranking 26th in this category.
France lagging behind
According to the report, France has the least competitive tax system in the OECD, and has occupied last place for the past four years. France scores very poorly, ranking last (35th) in the index. With corporate tax at 34.3%, France does not compare favourably with its neighbours. France also has high land taxes, high and progressive income tax, and a wealth tax. Germany ranks 23rd, and Belgium has maintained the same position as last year, in 27th place.
(article written by the editorial team of the portal luxembourg.lu)